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WASHINGTON (Reuters) - U.S. House of Representatives Speaker John Boehner's offer to accept a tax rate increase for the wealthiest Americans knocks down a key Republican road block to a deal resolving the year-end "fiscal cliff."

The question now boils down to what President Barack Obama offers in return. Such major questions, still unanswered so close to the end of the year suggest, however, that no spending and tax agreement is imminent.

A source familiar with the Obama-Boehner talks confirmed that Boehner proposed extending low tax rates for everyone who has less than $1 million in net annual income, meaning tax rates would rise on all above that line.

Under current law, the 36 percent top tax rate is scheduled to expire on January 1, and would automatically go to 39.6 percent. Boehner's proposal would allow that rate to rise as scheduled at a threshold of $1 million - putting it back to where it was during the Clinton administration.

The White House has not accepted the proposal and the source could not confirm any additional talks were held on Sunday between Obama and Boehner.

With just over two weeks before the fiscal cliff's $600 billion in automatic tax hikes and spending cuts are triggered, threatening a new recession, there is little time to craft a comprehensive deal that will satisfy both Democrats and Republicans.

Until the latest Republican offer, made on Friday, Boehner had insisted on extending all of the Bush era's lower tax rates, resisting Obama's demand to let the marginal rates rise on income above $250,000. A rising chorus of business executives also had urged Republicans to agree to this.

Some lawmakers and congressional aides had predicted that Republicans, once serious negotiations began, might try to raise the $250,000 threshold, say to $500,000 or $1 million. They also speculated that Republicans, if forced into a tax rate hike on the upper-income groups, might seek a smaller increase, say to around 37 percent.

Although the White House has not accepted Boehner's gambit, it could push negotiations away from entrenched, ideological positions.

"Boehner has now accepted the premise of higher rates. So now we're just arguing over details. I think it's a significant step," said Greg Valliere, chief political strategist at Potomac Research Group.

A framework deal spelling out tax revenue and spending cut targets to be finalized in the new year could be possible, Valliere said.

"Boehner's offer to allow tax rates to go up for taxpayers earning over $1 million fundamentally transforms fiscal cliff negotiations," added Sean West, U.S. policy analyst at Eurasia Group, a political risk consultancy.

In a note to clients, West wrote that it signals, significantly, that Boehner ultimately believes a deal to avoid the cliff is still possible.

"The political burden is now shifted back to the president, who must be willing to take on his party in order to get a deal Boehner can ultimately pass. We do not think the president will overreach: Obama will work with Boehner to get to a deal."

There are still several critical elements to a deal besides a tax rate increase on the wealthy, including Republican demands to cut spending on social programs.

Changes to the expensive Medicare and Medicaid health care programs for the elderly and the poor could be central to any deal, which must also include an increase in the federal debt limit needed by the end of February.

DEMANDS SOCIAL PROGRAM CUTS

Boehner conditioned his tax rate increase offer on Obama's agreement to cuts in social program spending, often called entitlements.

Many Republican lawmakers want to raise the eligibility age for Medicare to 65 from 67. They also want to link Medicare to the income of recipients, making wealthier retirees pay more for their care.

Currently, Medicare does have some means testing, charging higher premiums for coverage of doctors visits and prescription drugs to individuals earning more than $85,000 and married couples earning more than $170,000. Only about 5 percent of recipients pay these higher premiums.

Thus far, Obama has offered only about $400 billion in 10-year entitlement savings, mostly through small adjustments in reining in health care costs - not fundamental changes such as raising the eligibility age.

And just as Boehner faces opposition in his own party to raising any tax rates, Obama faces opposition to cuts to Medicare, Medicaid and Social Security from Democrats, who pledged in election campaigns they would protect these programs.

A major bloc of congressional Democrats has already signaled they will not accept major cutbacks in Medicare as part of any fiscal cliff deal.

House Minority Leader Nancy Pelosi of California and Maryland Representative Chris Van Hollen of Maryland are among the high ranking Democrats in the House who have come out forcefully in recent days against raising the age for eligibility for Medicare to 67 years of age.

"Given the level of savings that is being talked about from Medicare, you can't get it all from providers and drug makers," said Paul Heldman, an analyst at Potomac Research, which tracks Washington policy for investors.

"So opponents of raising the eligibility age have reason to believe beneficiaries will take some sort of hit if a mega-deal is cut," he said.

If Republicans are not successful in securing entitlement program cuts in exchange for a tax-rate increase on the wealthy, they are adamant about using a debt-limit increase as leverage to overhaul Social Security and Medicare.

The U.S. Treasury expects to reach its $16.4 trillion statutory debt cap by year-end, and will exhaust its remaining borrowing capacity around mid-February, risking a potential default.

Louisiana Republican Representative John Fleming, a member of the conservative Tea Party caucus who has never voted to increase the debt ceiling, said he would support a debt limit hike if it were part of a deal to make Medicare and Social Security sustainable.

The pace of activity could pick up the coming week.

House Republicans were told to prepare for a possible weekend session next week, potentially interrupting travel plans for the long Christmas holiday weekend.

House Majority Leader Eric Cantor scheduled "possible legislation related to expiring provisions of law," a reference to the expiring tax cuts, for the end of the week, portending a weekend session. Cantor has said the House would meet through the Christmas holidays and beyond.

I just heard on the news today that there's a heated discussion going on in Europe about Gerard Depardieu's decision to give up his French nationality and move to Belgium.

His reason for doing so..? He is protesting high tax rates on his income bracket in France - as with a lot of other countries - as much as 75%. Put that in context of the capital gains tax rates in the US, and you start to see why douchebag-Boehner is a complete moron and a d!ck.

What do the top earners pay in the States..? - a fraction of the general worldwide norm and will remain so even after rates go up as part of the Senate-passed budget bill (a 3-5% increase in rates in all categories).. And yet this douchebag Boehner has to hold an entire nation hostage to meet some a$$-backward ideology propagated by some moron like Nor-a$$hole-quist.

Fact is, the top income bracket that Obama is targeting for tax rate increases would probably not even notice the 3-5% increased tax rate in the larger scheme of things. The majority of Americans support the notion of increasing tax rates on the top earners. And yet this douchebag Boehner has to hold an entire nation hostage for ideological reasons.

Fact is, if the Senate-passed budget bill is taken up in Congress today, it would pass and become law. And this douchebag Boehner won't let it happen.

Boehner is like a spoilt second grader who's just looking for some free publicity. He has the intellectual ability of a second grader as well (just hear him address the press on the fiscal issue), and has no place in any serious adult discussion on taxes and revenues. Put his churlish behavior in light of the risk - the austerity that will stifle an economy ready to boom - and it's just appalling. He has to learn to be realistic, pragmatic and get away from his focus on political and ideological agendas, and that will be a good day for America.

As for these tax hikes, Boehner has made his concession and Obama can get his increase on millionaires (which I frankly agree with). If Obama holds out to stick it to all those making over 250k, disappointed I will be.

Do you see a pattern here - first, Boehner refuses any kind of tax revenue increase. Then he says that increasing tax revenue though 'closing loopholes and reducing deductions' - which IMO is the most ludicrous phrase of 2012 - is a good idea. Then he steps forward and says that increasing rates over $1 million has to be a part of the plan.

Why can't this moron see the light of rationality and common sense in one step? Why is he putting the nation through a series of his churlishness in a stepped way? Does he think it will reduce the impact on his tax-conservative base like the Norquists of the world and help preserve his 'dignity' somehow?

Get over with it already, just come out and acknowledge that the Senate bill is a rational and sensible measure to fix the budget crisis, the only one one the table, and it already represents a good middle ground between both sides of the aisle. Don't put the nation in a strangle hold just for ideological reasons, and make way for passing the bill in front of you already.

Do you see a pattern here - first, Boehner refuses any kind of tax revenue increase. Then he says that increasing tax revenue though 'closing loopholes and reducing deductions' - which IMO is the most ludicrous phrase of 2012 - is a good idea. Then he steps forward and says that increasing rates over $1 million has to be a part of the plan.

Why can't this moron see the light of rationality and common sense in one step? Why is he putting the nation through a series of his churlishness in a stepped way? Does he think it will reduce the impact on his tax-conservative base like the Norquists of the world and help preserve his 'dignity' somehow?

Get over with it already, just come out and acknowledge that the Senate bill is a rational and sensible measure to fix the budget crisis, the only one one the table, and it already represents a good middle ground between both sides of the aisle. Don't put the nation in a strangle hold just for ideological reasons, and make way for passing the bill in front of you already.

Do you see a pattern here - first, Boehner refuses any kind of tax revenue increase. Then he says that increasing tax revenue though 'closing loopholes and reducing deductions' - which IMO is the most ludicrous phrase of 2012 - is a good idea. Then he steps forward and says that increasing rates over $1 million has to be a part of the plan.

Why can't this moron see the light of rationality and common sense in one step? Why is he putting the nation through a series of his churlishness in a stepped way? Does he think it will reduce the impact on his tax-conservative base like the Norquists of the world and help preserve his 'dignity' somehow?

Get over with it already, just come out and acknowledge that the Senate bill is a rational and sensible measure to fix the budget crisis, the only one one the table, and it already represents a good middle ground between both sides of the aisle. Don't put the nation in a strangle hold just for ideological reasons, and make way for passing the bill in front of you already.

How is it that Boehner has all this power you're describing? How can just one guy hold the nation hostage?

Oh, wait, it's because he was elected, right? So maybe he's doing what his constituents want him to do? So it's really his constituents that are holding the nation hostage.

But he's just one guy, it doesn't make sense that he can hold the nation hostage.

Oh, wait, he's the majority leader of the House. So the reason he can do what he's doing is because 240 other Reps are members of the same party. So it's really 241 guys holding the nation hostage.

Now, how did 241 guys end up in a position to hold the nation hostage? Oh, that's right, they were elected and put there by their constituents.

Do you see a pattern here - first, Boehner refuses any kind of tax revenue increase. Then he says that increasing tax revenue though 'closing loopholes and reducing deductions' - which IMO is the most ludicrous phrase of 2012 - is a good idea. Then he steps forward and says that increasing rates over $1 million has to be a part of the plan.

Why can't this moron see the light of rationality and common sense in one step? Why is he putting the nation through a series of his churlishness in a stepped way? Does he think it will reduce the impact on his tax-conservative base like the Norquists of the world and help preserve his 'dignity' somehow?

Get over with it already, just come out and acknowledge that the Senate bill is a rational and sensible measure to fix the budget crisis, the only one one the table, and it already represents a good middle ground between both sides of the aisle. Don't put the nation in a strangle hold just for ideological reasons, and make way for passing the bill in front of you already.

You're going about this in an overly simplistic and immature way. The Senate cannot originate a revenue bill, first of all. Second of all, you're interpretation of a middle ground is "do whatever the democrats want."

Thirdly, and most importantly, you are operating under a proven false assumption that this would "fix the budget crises". I have already shown otherwise and it is widely known that any new revenues gained by taking 250k and up will be grossly offset by new spending to the deficit will continue to grow regardless.

__________________

“They have the guns and therefore we are for peace and for reformation through the ballot. When we have the guns then it will be through the bullet.” - Saul Alinsky, quoting Lenin

“I wanted [Jimmy] Carter in and I wanted [Ford] out,” comedian Chevy Chase would later admit of his mocking Ford impersonation on "Saturday Night Live", “and I figured look, we're reaching millions of people every weekend, why not do it."

What's this, the Republican party that has essentially conflated compromise with capitulation is, actually, compromising? Next thing you know, they'll also pay attention to the American people, who, by large poll margins and as endorsed through Obama's reelection, favor increasing taxes on very wealthy individuals.

What's this, the Republican party that has essentially conflated compromise with capitulation is, actually, compromising? Next thing you know, they'll also pay attention to the American people, who, by large poll margins and as endorsed through Obama's reelection, favor increasing taxes on very wealthy individuals.

Poor people will vote to take from the rich? Shocking. Good thing we don't have a democracy and are set up as a representative republic eh?

__________________

“They have the guns and therefore we are for peace and for reformation through the ballot. When we have the guns then it will be through the bullet.” - Saul Alinsky, quoting Lenin

“I wanted [Jimmy] Carter in and I wanted [Ford] out,” comedian Chevy Chase would later admit of his mocking Ford impersonation on "Saturday Night Live", “and I figured look, we're reaching millions of people every weekend, why not do it."

More like the less than affluent are voting to reposition the fiscal burden by way of a more sustainable and fair tax code.

But Joe, the current setup is already massively disproportionate (and this can't be argued).

While extreme, AOG's point has some merit and there is a continuous push (especially over the last few years) to throw more and more of the burden onto a smaller and smaller group of people. At some point, you have to say to those at the bottom "ENOUGH!". We all remember Franklin's quote about "when the poor realize they can vote themselves good from the public treasury".

As for the OP, Boehner has made concessions and I think the president would be wise to cooperate and meet him at the million dollar mark. If he doesn't, it will be a huge slap in the face to the republican party (and yet the libs will continue to say it's the republicans who won't budge)

More like the less than affluent are voting to reposition the fiscal burden by way of a more sustainable and fair tax code.

Fair? The taxes are mostly already paid by these people. How about curtailing spending?

There is nothing sustainable about the current path. The revenue generated from what Obama wants would be akin to spitting in the ocean if they kept spending even static. Given the proposed spending increases, it would make even less of a difference.

Also, referring to public polls as an ok to policy is hilarious as I'm sure your opinions on gay marriage and abortion would not change if most people were against them...polling by convenience for you huh?

__________________

“They have the guns and therefore we are for peace and for reformation through the ballot. When we have the guns then it will be through the bullet.” - Saul Alinsky, quoting Lenin

“I wanted [Jimmy] Carter in and I wanted [Ford] out,” comedian Chevy Chase would later admit of his mocking Ford impersonation on "Saturday Night Live", “and I figured look, we're reaching millions of people every weekend, why not do it."

Perhaps because the very rich have a very disproportionate amount of the income and especially, wealth and are far more able to take on a modest increase in contributing to countries financial health.

Are increased tax rates on the higher earnings of the rich THE answer? Of course not, but they would be a very important part of the solution which will also include cuts on those least well positioned to endure them.

Perhaps because the very rich have a very disproportionate amount of the income and especially, wealth and are far more able to take on a modest increase in contributing to countries financial health.

Are increased tax rates on the higher earnings of the rich THE answer? Of course not, but they would be a very important part of the solution which will also include cuts on those least well positioned to endure them.

There should be NO tax increases until they are accompanied with real, tangible NOW cuts. Reagan was swindled by the democrats on this already, fool me twice...

__________________

“They have the guns and therefore we are for peace and for reformation through the ballot. When we have the guns then it will be through the bullet.” - Saul Alinsky, quoting Lenin

“I wanted [Jimmy] Carter in and I wanted [Ford] out,” comedian Chevy Chase would later admit of his mocking Ford impersonation on "Saturday Night Live", “and I figured look, we're reaching millions of people every weekend, why not do it."